AUSTIN >> William J. White, the man who acts both as a payday lender and the state's top consumer watchdog, might think customers take on his company's high-interest loans with their eyes wide open.

But independent surveys of Texas payday-lending and title-loan businesses indicate that payday lenders have a poor record of disclosing information about the loans as required by Texas law and industry standards.

Those businesses include White's own company. A follow-up visit to one of its stores confirmed that the violations were as recent as last week.

Visits to 52 El Paso payday lenders in fall 2012 revealed that most payday lenders did not post a legally required warning, were inconsistent in reporting interest rates and did not allow borrowers to review loan contracts until they filled out an application that gave lenders access to their bank accounts.

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Surveys conducted in Dallas and Austin during the spring and summer of 2012 found that payday lenders in those cities also had a poor record of following Texas disclosure laws.

New controversy

Texas cities, as well as religious and charitable organizations, for years have been working for increased regulation of the industry, which lends at annual percentage rates greater than 500 percent.

The fight took center stage in the Texas governor's race after White made controversial comments to the El Paso Times in late December.

White is Gov. Rick Perry's appointee as chairman of the Texas Finance Commission, the agency that oversees the state's consumer watchdog, the Office of Consumer Credit Commissioner.

White also is a vice president of Cash America, a payday lender that in November became the first business to be sanctioned by the U.S. Consumer Financial Protection Bureau for abusive practices and for obstructing the bureau's investigation.

State Sen. Wendy Davis, the likely Democratic candidate for governor, and four other Democratic senators are calling for White's removal.

The call comes after he told the Times that borrowers get stuck in loans they can't repay because they make bad financial decisions -- such as buying $6,000 TVs.

"You have to look at the individual circumstances as to what put them in that position," White said. "Are they paying for a 60-inch TV?"

Many critics of the industry have disputed that claim, saying people take out the loans because they're desperate for cash to pay for things like car repairs. Lenders such as White take advantage of their desperation to gouge them with unconscionable interest rates, industry critics say.

Attorney General Greg Abbott, the likely Republican candidate for governor, so far has not responded when asked if he supports White or if he thinks the payday-loan industry needs tighter regulation. On Friday, the Democratic group the Lone Star Project called on Abbott to use the state's conflict-of-interest laws to force White from his post.

State data show that at least 60 percent of the payday lending industry's revenue is from short-term loans that have been extended beyond the initial term. White said those extensions are the product of borrowers' conscious decisions.

"People make decisions," he said. "There's nobody out there that forces anybody to take any kind of loan. People are responsible for their decisions, just like in my life and in your life. When I make a wrong decision, I pay the consequences."

Incomplete disclosure

But independent surveys in Texas cities show that payday-lending businesses -- including White's employer -- have not complied with basic disclosure laws that are intended to help customers make informed decisions.

"The disclosure requirements are very simple and very basic," said Ann Baddour, a policy analyst with the advocacy group Texas Appleseed. "If they're not even complying with those, what does it tell you about the broader practices of this industry?"

Texas Appleseed compiled data and produced the survey reports from El Paso, Dallas and Austin. It advocates for tighter regulations of payday and auto-title lenders.

In El Paso, the survey was coordinated by El Paso Affordable Housing, a group that helps people become credit worthy so they can buy houses.

"We had gotten some reports from customers that we counsel that the payday lenders made loans to members of the military and their families" in excess of a federal law that limits annual interest on loans to troops at 36 percent, said Larry Garcia, president of El Paso Affordable Housing.

The organization recruited volunteers -- mostly from the El Paso Housing Authority -- to visit payday lenders and make scripted inquiries about taking out loans and then report what they saw and heard. After throwing out about 10 responses, the El Paso Affordable House sent the remaining 52 to Texas Appleseed for compilation.

Garcia said he was struck when surveyors came back and reported that lenders gave inconsistent numbers when asked what interest rates their short-term loans carry.

"That made us think the people helping the surveyors didn't quite know what they were saying," Garcia said.

For example, surveyors visited four Fast Cash locations. A worker at one said it charged 322 percent annual interest for a payday loan, according to the survey report. Another said interest was 487 percent. A third said it was 550 percent. A fourth said 661 percent.

Fast Cash didn't immediately respond to an emailed request for comment, but its website gives prominent play to the potential downsides to talking out a payday loan. A page labeled "The Ugly" has a chart labeled "The Death Trap" that lists the costs that mount as payday loans are rolled over.

No fair warning

A new law that took effect at the beginning of 2012 subjected "credit-service organizations" such as payday lenders to regulation by the Office of the Consumer Credit Commissioner and required them to prominently post a warning.

"An advance of money obtained through a payday or auto title loan is not intended to meet long-term financial needs," the state-mandated warning says. "A payday or auto title loan should only be used to meet immediate short-term cash needs. Refinancing the loan rather than paying the debt in full when due will require the payment of additional charges."

The El Paso survey report found that 86 percent of the 52 stores it visited did not post that warning. The stores included 10 owned by Cash America, White's employer, but the report did not break down its compliance figures by owner or location.

Cash America did not respond to a request for comment for this story.

The failure of the payday lenders to make legally required disclosures undermines White's claim that borrowers are entering into the loans with their eyes open, said former El Paso city Rep. Susie Byrd, who pushed the city to pass its payday-lending ordinance a year ago.

"If you don't have access to information that you are required to have by law, I have big problems with that assertion," Byrd said.

State regulation

In his capacity as chairman of the Finance Commission, White oversees the office of the Consumer Credit Commissioner, the agency that is supposed to enforce disclosure laws. In its October report to the commission, the office reported a 90 percent rate of compliance among Texas' payday and title lenders.

But Rudy Aguilar, director of consumer protection for the office, said his examiners are looking at a lot more than whether payday lenders are making the required disclosures.

During all-day examinations, state regulators determine whether lenders are following legal requirements that run well beyond disclosure, and they try to make sure businesses aren't involved in out-and-out theft.

He said examiners have found many violations of disclosure requirements.

"I wouldn't say it's habitual, but we do find a significant volume," he said.

However, the state's system for scoring payday lenders does not penalize them heavily for violations that are easily fixed, such a posting a required warning or interest rate. That helps explain why disclosure problems haven't hurt the industry's compliance rate more than it has, Aguilar said.

As it is, the office is struggling to meet its goal of examining each of Texas' 3,500 payday lenders at least once every 36 months, Aguilar said.

"I can tell you right now, that's going to be a challenge," he said.

Byrd said that she was especially disturbed that payday lenders in El Paso would not allow customers to review loan contracts before they applied for loans.

"Payday and auto title lenders make it difficult for consumers to review loan terms," the El Paso survey report said. "Specifically, none of the businesses allowed surveyors to view the loan contract prior to initiating a loan application. It is worth noting that initiating a loan application requires providing the storefront with access to your bank account and presenting a pay stub. This lack of accessibility to the actual loan documents is a barrier to potential borrowers making decisions with complete, accurate information."

However, Aguilar, the state's director of consumer protection, said there is no law requiring lenders to allow borrowers to see loan contracts before they go through the application process.

Voluntary measures

The surveys in El Paso, Austin and Dallas also found that payday lenders did a poor job following the "best practices" that were recommended by their trade association, the Consumer Service Alliance of Texas.

Among those recommendations is that after a loan has been rolled over four times, the customer be offered a no-fee extended-payment plan.

The El Paso survey found that less than 10 percent of payday lending stores posted the best practices and 76 percent of stores told customers they could roll over their loans indefinitely.

Rob Norcross, a spokesman for the alliance, said the surveys might have found spotty compliance because the alliance deadline for mandatory compliance was Oct. 1, 2012 -- after the surveys were conducted. He made no excuses, though, for the industry's poor performance in El Paso.

"I have no explanation why so few stores in a market complied with the best practices," he said.

At the insistence of some of its members, the alliance last year started conducting its own, unannounced spot checks and is getting better results than the 2012 surveys did, Norcross said.

The El Paso survey also found that in no instance did a payday lender ask a prospective borrower if he or she was a member of the military.

In an attempt to comply with the 36 percent federal limit on loans to troops, borrowers have to declare their military status as they apply for loans. But Baddour said that suggests that compliance by lenders is less than enthusiastic.

"You would think that a business wanting to obey the law would want to ask a question like that upfront," she said.

Baddour traveled to El Paso last week to help push the City Council to begin enforcement of the city's payday-lending ordinance. While she was there, she dropped in on several payday lenders on Dyer Street near the gates of Fort Bliss.

One was a Cash America store where the pricing of payday and title loans was not posted as required by law. The worker there "wouldn't give me any information unless I gave her my pay stub," Baddour said.

Norcross said officials with Cash America "need to fix that. ... They've got to comply with the law."

Baddour said it was a depressing confirmation of what the 2012 surveys found.

"I definitely have concerns that not even basic information is being provided at these locations -- that's what the surveys consistently have shown," Baddour said. "The standards are so minimal. It's very concerning to me that they're not even doing that."

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